Cash Accounting and Cash Flow Planning with
SAP Liquidity Planner
Stephan Kerber, Dirk Warntje
Content
Introduction .............................................. 3
3.4
Cash Accounting Processes ................... 28
Structure of the Book .....................................
3
Information Acquisition from
Acknowledgments ..........................................
4
Assignment Mechanisms ...................... 28
Information Acquisition from
1
Business Overview .................................. 5
1.1
The Concept of Cash Accounting ..........
1.2
Tasks of Cash Accounting and
2
6
Manual Assignment and Manual
Transfer Posting ................................... 36
Recipients and the Need for
Information ..........................................
1.4
Information Acquisition from
Financial Accounting ............................ 31
Liquidity Planning .................................
1.3
Bank Statement Information ................ 29
5
7
Analysis Reports ................................... 36
Financial Accounting and
3.5
Cash Accounting ...................................
8
1.5
Differences to Cash Management .........
9
1.6
Conclusion ........................................... 11
4
Case Scenario: Implementing Cash
Accounting and Liquidity Planning .... 13
2.1
Conclusion ........................................... 37
SAP Liquidity Planner: Liquidity
Planning and Reporting
Using SAP BW/SEM ............................... 39
4.1
Modeling in SAP BW/SEM .................... 40
SAP Business Content
Conclusion ........................................... 15
......................... 40
Master Data ......................................... 45
Characteristics ..................................... 53
3
SAP Liquidity Planner: Liquidity
Analysis Using SAP Actual
Calculation ................................................. 17
4.2
The Liquidity Planning Process .............. 63
3.1
Overall Process and System
4.3
Extracting Actual Data .......................... 64
Integration ............................................ 17
4.4
Reporting in SAP BW ............................ 67
Technical Settings in SAP Actual
4.5
Conclusion ........................................... 69
3.2
Planning Layout in
SAP SEM-BPS/BW-BPS ........................ 54
Calculation ........................................... 17
3.3
(Cash Accounting) ................................ 19
5
Liquidity Planning and Reporting
Without SAP BW/SEM .......................... 71
Data Model and Master Data ............... 19
5.1
Overview .............................................. 71
Functionality—Overview ..................... 21
5.2
Customizing .......................................... 71
SAP Actual Calculation
... 21
5.3
Master Data and Actual Data ................ 75
Tools .................................................... 26
5.4
Planning ............................................... 76
Tables ................................................... 27
5.5
Reporting ............................................. 77
5.6
Conclusion ........................................... 78
Customizing SAP Actual Calculation
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Content
6
Outlook ...................................................... 79
Appendix .................................................... 81
Lee Iacocca and Cash Flow ............................. 81
Indirect Cash Flow .......................................... 81
Plug-in ........................................................... 81
Case Scenario ................................................. 82
Bibliography .............................................. 83
Index ........................................................... 85
2
© Galileo Press 2006. All rights reserved.
Introduction
This book is about money. Where does money come
you can meet these requirements using SAP Liquidity
from and where does it go? Because liquidity is one of the
Planner and also, how you can implement this product.
critical success factors for a company, it is integral to run-
Readers of this book should have a sound knowledge of
ning a business. The most important aspects of liquidity
the accounting application in SAP R/3 as well as SAP BW
are the ability to ensure solvency and generate payment
and SAP SEM.
surpluses. In this context, companies constantly try to analyze and plan their cash flow. Unfortunately, established
applications such as Accounting or Cash Management
Structure of the Book
don’t provide the necessary information on cash flow re-
Chapter 1 outlines the business principles and provides
quired by companies; however, SAP Liquidity Planner af-
clear definitions of the terms used in the context of cash
fords you with the much needed relief in this area, as
accounting and liquidity planning. In addition, the con-
shown by its first implementations in both nationally and
cept of cash accounting is introduced, along with a de-
internationally operating companies. The complex re-
scription of its interdependencies with accounting. In the
quirements placed on a retrograde liquidity analysis, a
final sections of this chapter, we clearly distinguish SAP
decentral planning tool, and an efficient reporting were
Liquidity Planner from SAP Cash Management.
met by the use of SAP Liquidity Planner.
Chapter 2 describes a case study that is referred to and
SAP Liquidity Planner is a component that consists of
further developed throughout the book. We use this ex-
two applications: Cash Accounting (SAP R/3) and Liquid-
ample to help you understand the functionality and the
ity Planning (prior to Release 3.5, it was part of SAP Stra-
technical concept of SAP Liquidity Planner, but it should
tegic Enterprise Management (SAP SEM), from SAP Busi-
also serve as an aide to you in implementing this compo-
ness Information Warehouse (SAP BW) Release 3.5 on-
nent.
wards, it has been included in BW). Cash accounting
Chapter 3 and Chapter 4 contain a detailed description
determines the cash flow either based on an electronic
of SAP Liquidity Planner. They provide an insightful intro-
bank statement or data from financial accounting. Liquid-
duction to the two main areas of the product: Chapter 3
ity planning is carried out using the planning functionality
describes Cash Accounting (SAP R/3), while Chapter 4
in SAP BW. Reporting is performed by SAP BW.
deals with Liquidity Planning (SAP BW). In both chapters,
In the past, this component was part of Corporate Fi-
you will also find detailed information on customizing
nance Management (CFM), and since the introduction of
and the various functions of the application. Wherever
mySAP Enterprise Resource Planning (mySAP ERP) in 2004,
necessary, the case scenario is referred to, enhanced, and
it has been located in the Cash Management and Liquid-
completed.
ity Management area as part of Financial Supply Chain
Management (FSCM).
This SAP Press Essentials book outlines the concepts of
Chapter 5 describes a workaround for simplified liquidity planning and reporting in SAP R/3 without using SAP
BW.
cash accounting and liquidity planning, as well as the re-
Chapter 6 addresses possible developments and future
sulting requirements that a business software must be
requirements of SAP Liquidity Planner. The Appendix con-
able to meet. In this book, the authors demonstrate how
tains additional information.
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3
Introduction
Acknowledgments
SAP is a registered trademark of SAP AG, Dietmar-HoppAllee 16, D-69190 Walldorf. We would like to thank
SAP AG for its permission to use the trademark and the
materials provided in this book. Note that SAP AG, however, is not the publisher of this book nor is it responsible
for the contents of this book.
We would like to express our deepest gratitude to our
colleague Robert Bieber who supported us with numerous tips and invaluable information.
4
© Galileo Press 2006. All rights reserved.
1 Business Overview
In this chapter, we will first define and differentiate cash
Cash accounting records the changes of cash flows, cash
accounting and liquidity planning. This is a rather impor-
flows being incoming and outgoing payments of liquid
tant step in understanding these concepts as they are of-
funds such as cash in hand and bank savings.
ten used in a multitude of ways. Next, we‘ll describe the
In accordance with national and international account-
tasks performed by cash accounting and liquidity plan-
ing standards such as FASB and IAS, we will use the term
ning. Because cash accounting and general accounting
“cash flow” in this book to describe the changes in the
are inherently interrelated, we should point out their in-
means of payment. Liquidity is therefore referred to as a
terrelationships. Lastly, we’ll describe the differences be-
financial accounting-related concept. Within a certain
tween cash accounting and SAP Cash Management.
period, cash accounting records transactions that have a
direct influence on the stock of liquid funds, regardless of
1.1
the period the payments refer to (see Geuppert 2003,
The Concept of Cash Accounting
p. 8). This type of recording and displaying of cash flows
In business literature, you’ll find countless discussions
can be compared to fiscal accounting, which is used in
about the concept of cash accounting and its definition. In
the public sector.
these discussions, you’ll also encounter the following
Therefore, cash accounting distinguishes itself from ac-
terms: cash budget management, flow-of-funds analysis,
crual accounting and cost accounting. Figure 1.1 illustrates
and cash flow statement, as well as cash flow accounting.
Data Source
(SAP)
Incoming/Outgoing Payments
Expenditure/Revenue
Expense/Profit
Costs/Benefits
Cash
Accounting
Accounting
Controlling
Cash Accounting
Cash Basis Accounting
Profit and Loss Statement
Cost and Activity Accounting
Figure 1.1 Cash Accounting in the Context of General Accounting (according to Baetge 1992, pp. 3)
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5
1
Business Overview
the basic differences between the various types of ac-
up until one year before its insolvency, it wasn‘t able to
counting.
meet its payment obligations. However, cash flow had al-
In addition, it is now apparent that in business theory,
ready been negative in earlier years.
cash accounting always refers to several periods. This
concept is generally adopted by SAP Liquidity Planner.
Because the SAP Liquidity Planner component consists of
two applications (see Section 3.1), the first application,
SAP Actual Calculation, refers to past and current periods, while the other application, SAP Liquidity Planning
(SAP BW/SEM), considers future periods.
Cash Accounting
Liquidity Planning
t
past
current
period
Figure 1.3 Comparison of Profit and Cash Flow at W. T. Grant
(Source: Largay/Stickney 1980, pp. 15)
future
The reason for such a discrepancy can be found in the different ways in which information is analyzed by accounting. For example, discrepancies can occur due to an in-
Retrograde Determination
Reciprocal Determination
creased stocking up of a warehouse, an expansion strategy that requires high investments, or by a bad overall
Figure 1.2 Time-Based Delimitation of Cash Accounting and
Liquidity Planning
economic situation during which extended terms of payment are granted.
A classic example that personifies this state of affairs,
1.2
Tasks of Cash Accounting and Liquidity
Planning
and is therefore frequently cited, is the situation at Chrysler Corporation at the end of the 1970s when Lee Iacocca
assumed the position of CEO. At that time, Chrysler had
The primary task of cash accounting is to provide infor-
a high stock of automobiles, compounded by a low de-
mation on a company’s solvency and internal financing
mand for these vehicles. The cash flow situation was very
potential. Apart from that, it serves as a basis for the cre-
critical (see also the section in the Appendix, Lee Iacocca
ation of flow-of-funds analyses and plannings. Compared
and Cash Flow, or Iacocca 1984, pp. 200).
to the balance sheet and the profit and loss statement,
These two examples (i.e., W. T. Grant and Chrysler)
cash accounting enables you to better assess the financial
clearly show that in order to evaluate the degree of sol-
situation of a company.
vency, cash flow is a far better indicator than the profit of
The ability to generate sufficient liquid funds from its
business activities and to secure these funds in future pe-
a company.
Usually a company‘s external financing potential, for
riods is one of the prerequisites for a company to survive
example, by acquiring external capital, is rather limited.
(static aspect) (Amen 1999, p. 4). Cash accounting sup-
Due to the size of the company or its current situation
ports a company in evaluating its solvency status as well
(for example, high debt-equity ratio), external financing
as its insolvency risk.
can become increasingly difficult. For this reason, the in-
The comparison of profit and cash flow of the W. T.
ternal financing potential plays an increasingly important
Grant company, as shown in Figure 1.3, demonstrates the
role within the range of different financing possibilities
importance of analyzing and determining the cash flow
for a company (dynamic aspect) (Amen 1999, p. 4).
situation. Even though the Grant company was profitable
Internal financing potential means that a company can
6
© Galileo Press 2006. All rights reserved.
1.3 Recipients and the Need for Information
generate more revenue than expenditures from its activi-
The total of the three areas represents the total cash flow
ties. This potential is also referred to as internal financing
of the company. The cash flow statement is an essential
strength. If a company can continuously build up liquid-
part of quarterly and annual reports since it meets the in-
ity, in addition to conducting its regular business activity,
formation needs of various recipients (see Section 1.3).
this surplus is called strategic liquidity.
To obtain universally valid and comparable information on the degree of solvency of a company, the internal
1.3
Recipients and the Need for Information
financing potential and the overall financial situation, na-
According to the Financial Accounting Standards Board
tional and international accounting principles require
(FASB), the major recipients of cash accounting informa-
flow-of-funds analyses or cash flow statements as proce-
tion that is contained in a cash flow statement are the fol-
dures and display formats. Here a distinction is made be-
lowing groups (FASB 1978, para. 25):
tween indirect and direct procedures. In this book we

will only describe the direct procedure since cash ac-
Investors, lenders, suppliers, employees
“To investors, lenders, suppliers, and employees, a busi-
counting doesn‘t support the indirect procedure. There-
ness enterprise is a source of cash in the form of divi-
fore, direct procedure will be a critical part of this book.
dends or interests …, repayment of borrowing, pay-
You can find an example of the indirect procedure, which
ment for goods or services, or salaries or wages. They
is supported by accounting (SAP FI), in the Indirect Cash
invest cash, goods, or services … expect to obtain suffi-
Flow section in the Appendix of this book.
According to national and international regulations,
cient cash in return …”

Customers
the flow-of-funds analysis can be divided into three ar-
“To customers, a business enterprise is a source of goods
eas:
or service, but only by obtaining sufficient cash to pay for

Cash flow from operating activities
the resources it uses—and to meet its other obligations—

Cash flow from investing activities
can the enterprise provide those goods or services.”

Cash flow from financing activities

Management
“To managers, the cash flows of a business enterprise are
According to IAS 7, the basic structure of a flow-of-funds
a significant part of their management responsibilities,
analysis could look as follows (Kütting/Weber 2001, pp.
including their accountability to directors and owners.”
467):

Cash flow from operating activities
Figure 1.4 illustrates the major important relationships
+ Incoming payments from customers
between a company and its business partners in terms of
– Outgoing payments to suppliers
activities and liquidity.
Due to the different kinds of business relationships,
= Cash flow from operating activities (1)

Cash flow from investing activities
each of the involved parties has a specific need for infor-
+ Incoming payments from asset retirements
mation with regard to cash accounting. The following list
– Outgoing payments for asset acquisitions
contains the most important items (Geuppert 2003, pp.
+ Incoming payments from financial asset retirements
10, and FASB 1978, para. 24):
– Outgoing payments for investments in financial

assets
For management

= Cash flow from investing activities (2)

Cash flow from financing activities
on short-term and long-term liquidity planning

+ Incoming payments from equity allocations
Determining the internal financing potential,
building up strategic liquidity, and determining requirements for external financing
– Outgoing payments to company shareholders
+ Incoming payments from borrowings
Ensuring solvency by optimizing cash flow based

Determining financing requirements for planned
– Outgoing payments for loans
investments and integration in cash accounting
= Cash flow from financing activities (3)
and liquidity planning
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1
Business Overview
Investors
Investment
Lenders
Loan
Amortization and
Interest Payments
Dividends and
Withdrawals
Suppliers
Payment of
Activity
Company
Payment of
Activity
Payment of
Activity
Employees
Customers
Cash Flow
Activity
Figure 1.4 Cash Inflow and Cash Outflow from a Company‘s Perspective (according to Geuppert 2003, p. 10)

Ensuring creditworthiness, particularly with regard
to the requirements of rating agencies


Financial Accounting and Cash Accounting
The data source (see Figure 1.1) for cash accounting is the
For investors and lenders (equity providers and pro-
posting material in financial accounting. In financial ac-
viders of external capital)
counting, cash accounts, balance sheet accounts, and
Assessing the ability to pay dividends, interest, and
profit and loss accounts (P&L accounts) are interrelated;
amortization
therefore, we can also speak of a threefold accounting
For suppliers
system. This account-based integration1, as shown in Ta-
Evaluating the creditworthiness and solvency and
ble 1.1, enables you to determine the cash flow required
forecasting the payment behavior based on these
in cash accounting.
evaluations

1.4
For employees
Evaluating the creditworthiness, solvency, and future
Chart of accounts
Cash accounts
Balance sheet
accounts
P&L accounts
Cash accounting
Balance sheet
Profit and loss
statement
existence of the company

For customers
Assessing the delivery reliability and the consistency
of conditions
The different recipients—and therefore varying information needs—demonstrate the importance of cash accounting and liquidity planning.
Revenues
Expenditures
Assets
(without
liquid
funds)
Cash balance
Liabilities
Expense
Profit
P&L account
Table 1.1 The Three Parts of Accounting
1 Accounting and consequently ERP systems are structured according to
the principle of double-entry accounting. A triple-entry accounting system hasn’t been implemented yet.
8
© Galileo Press 2006. All rights reserved.
1.5 Differences to Cash Management
In addition, business transactions related to accounting
It is apparent that the connection between two account
can be classified as affecting net income and not affecting
assignment types demonstrates the source or application
net income, and as having an effect on liquidity and having
of funds. This is because the central task of cash account-
no effect on liquidity (Gebhardt 1999, pp. 21). The pay-
ing is the “What for” search: “What have funds been re-
ment of a dividend, for instance, is a transaction that af-
ceived or paid for?” Let‘s try to clarify this with another
fects the net income and the liquidity; therefore, it is rel-
example.
evant for both cash accounting and the profit and loss
In the accounting department of a company, a sup-
statement. The depreciation of an asset merely affects the
plier invoice (1) is posted. The posting displayed in Figure
net income, but not the liquidity. This distinction makes
1.5 affects the net income, but has no effect on liquidity.
it easier to determine the source of funds and their appli-
This is further clarified by the posting example in Table
cation. Figure 1.5 illustrates the relationships between
1.2.
the individual accounts in financial accounting.
Here you can see that there are 14 different account
Bank
Office
equipment
Vendor
assignment types available to post business transactions
$ 100
in accounting. For each account assignment type, we
have provided an example (the following numbers corre-
(2) (2) $ 100
$ 100
(1)
(1) $ 100
Table 1.2 Vendor Payment
spond to the posting example used in Figure 1.5):
1.
Cash payment for office equipment
Then the open item is paid (2). According to Figure 1.6,
2.
Revenue from cash sales
this transaction has an effect on the liquidity, but not on
3.
Depreciation of tangible assets
the net income.
4.
Posting of supplier invoice
5.
Invoicing of an activity
each other can you determine the cash flow according to
6.
Dissolving of provisions
its application. One hundred dollars ($ 100) was used for
7.
Revenues from invoices
office equipment. This posting is a simple example of the
8.
Borrowing
direct determination of a cash flow.
9.
Payment of supplier invoices
10. Cash payment for material purchases
11. Accounting exchange on the assets side
Only when these two postings haven been linked with
1.5
Differences to Cash Management
12. Contribution in kind from shareholders
In this section, we’ll describe the primary differences
13. Clearing of receivables and payables
between Cash Management and Liquidity Planner. SAP
14. Accounting exchange on the liabilities side
Cash Management is focused on short-term cash manage-
Figure 1.5 Accounting-Relevant Linking of Cash Accounts, Balance Sheet Accounts, and P&L Accounts
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1
Business Overview
Cash Management
Cash Accounting
Cash Management and
Forecast
Opening Balance
Revenues
Revenues
Revenue
Liquid Tangible Assets
Other
…
Customer Group X
Customer Group Y
…
Expenditures
Expenditures
Material
Personnel
Taxes
…
Vendor Group X
Vendor Group Y
…
Closing Balance
Closing Balance
Figure 1.6 Distinction Between Cash Management and Cash Accounting
ment, whereas SAP Liquidity Planner considers medium
to long-term liquidity planning.
mined is “From whom” and “For whom.” What the funds
are paid for cannot be identified. Conversely, cash ac-
Cash Management provides information on the cur-
counting refers to real cash flow and the source and ap-
rent bank account status and it contains a liquidity fore-
plication of funds can be identified. Unlike Cash Manage-
cast regarding incoming and outgoing payments from the
ment, cash accounting requires all general ledger ac-
perspective of payments for accounts receivables and for
counts that have an effect on liquidity, as described in
accounts payables (or write: payments to customer and
Section 1.4.
to vendor). The bank accounts in the general ledger con-
Moreover, cash accounting is part of an overall process
stitute the data basis for the bank account status. If a
that consists of cash accounting and liquidity planning,
bank account shows a current status of $ 500, this status
which will be described in further detail in Chapters 3
is displayed in the bank account status in Cash Manage-
and 4.
ment. The liquidity forecast uses accounts receivable and
accounts payable as a basis. It evaluates the open items
Table 1.3 contains a list of the most important differences:
of suppliers and customers, and the terms of payment
stored with the respective documents, and displays this
Cash Management
Cash Accounting
information in the liquidity forecast. A cash flow is not
No consideration of cash flow
Real cash flow consideration
determined, because only the open items are evaluated
No identification of source
and application of funds
Identification of source and
application of funds
and displayed. In addition, the cash flows to be expected
can be displayed only with regard to specific customers
and customer groups, or suppliers and supplier groups
respectively. The only information that can be deter-
10
© Galileo Press 2006. All rights reserved.
Table 1.3 Differences Between Cash Management and Cash
Accounting
1.6 Conclusion
Cash Management
Cash Accounting
Accounting as the data
source, but only bank
accounts and subledgers
All relevant accounts of cash
accounting chart of accounts as
data source
Liquidity forecast (based on
open items)
Forecast of revenues and expenditures possible (based on open
items)
View: Vendors and customers
(groups) and bank account
status
View: Revenue and expenditure
items
No integration in planning
process
Integrated planning process
(SAP BW/SEM)
Table 1.3 Differences Between Cash Management and Cash
Accounting (cont.)
1.6
Conclusion
In the following chapters, we define the concepts of
cash accounting and liquidity planning and introduce
them in the context of different accounting types.
Moreover, we describe the group of recipients and
their need for information regarding cash accounting,
and we highlight the interdependencies with accounting by clarifying how you can use the information from
accounting to determine your cash flow situation.
Finally, we describe the differences between SAP
Liquidity Planner and SAP Cash Management to outline the tasks performed by SAP Liquidity Planner
within the FSCM product portfolio.
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11
2 Case Scenario: Implementing Cash Accounting and
Liquidity Planning
Based on a specific real-life situation that we’ve encoun-
or three years. However, the company expects a de-
tered several times, we will build up a scenario for imple-
crease in prices in the long run. This means that the
menting SAP Liquidity Planner. In the subsequent chap-
revenues from its core business will go down (cash
ters, this case scenario will be further developed in parts.
inflow reduction). At the same time, the company
This example is used to support your understanding of
forecasts a strong increase in raw material prices and
the functionality and the technical concept of SAP
rising labor costs at the production sites. This will
Liquidity Planner, but it will also serve as an aide in help-
lead to a situation in which the expenditures in pro-
ing you to implement this component.
duction will increase dramatically (increase in cash
The initial situation looks as follows: We’ll consider an
outflow). Consequently, net cash flow will be strongly
international corporation, the IDES Group, which is structured as follows:



reduced in the coming years.

Furthermore, company management expects product
The corporate headquarters is in Germany. The cen-
imitations to enter the market in two or three years,
tral departments of corporate accounting and global
which could lead to price wars and further aggravate
treasury are also located in Germany.
the situation. For this scenario, corporate manage-
Legally independent production sites exist in Ger-
ment expects an even stronger reduction of net cash
many and Eastern Europe.
flow.
The sales and distribution network stretches across

In the preceding year, the company acquired a US-
Europe and the US, with legally independent sales
based competitor in order to strengthen its market
companies in the respective countries.
position abroad. This acquisition was financed with a

Research and development is located at corporate
large bank loan that will be amortized within the next
headquarters in Germany.
10 years. So, for a period of 10 years, there will be

IDES uses SAP as its standard business software with
payments for amortization and interest (increasing
the currently implemented applications:
cash outflow).


SAP FI for accounting

SAP CO for controlling
Corporate management realizes that a continued pursuit

SAP SD for sales and distribution
of its existing strategy can quickly lead to a negative cash

SAP MM for materials management
flow situation; however, since the company is expected

SAP PP for production
to remain sound, the management decides to develop a
Concerning office applications, IDES uses a standard
comprehensive strategy that should include the factors
off-the-shelf office software.
mentioned above:

Future competitors will be met with a product offen-
The current business situation of the IDES group can be
sive at an early stage. For this reason, investments
described as follows:
should be made for the research and development of

Existing products have been introduced and distri-
new products. At IDES, the development of a prod-
buted throughout the markets and will continue to
uct takes two years. To cover R&D for this period, the
be distributed at the same high level for the next two
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13
2
Case Scenario: Implementing Cash Accounting and Liquidity Planning

company needs liquid funds (cash outflow for research
narios. The tool should also be used as a central reporting
and development in the coming two years).
platform.
The existing range of products will be introduced into
SAP Liquidity Planner is precisely the tool that meets
new markets, especially in Asia. For this expansion,
the company‘s requirements (see also Section 3.1). As
the company needs additional funds (cash outflow for
mentioned in the introduction, SAP Liquidity Planner
expansion to new markets). At the same time, man-
consists of two components:
agement expects additional revenues from selling ex-

SAP Actual Calculation (cash accounting)
isting products to the new markets (cash inflow from

SAP BW/SEM (planning application and reporting)
selling existing products to new markets).


The company wants to maintain the production sites
Cash accounting enables you to identify and evaluate the
in Germany. Therefore, corporate management will
cash flows in the company with regard to their value
develop new work and production models with its
dates. As SAP Actual Calculation accesses the data pro-
personnel, which are intended to reduce costs and
vided by SAP R/3 Accounting (cf. Section 1.4), manage-
expenditures (reduction of cash outflow in production
ment can ensure the quality of the actual data because of
for the coming years).
this integration. This data forms the basis for qualified
In addition, the company checks whether the existing
plan/actual analyses.
bank loan can be converted into a maturity loan. This
Since the planning and reporting functions in SAP Li-
measure would lead to a reduced cash outflow for a
quidity Planner are based on the functionalities of SAP
period of 10 years (reduction of cash outflow by re-
BW/SEM, the company can optimize the advantages of
scheduling the existing loan).
this product.
Corporate management benefits from using SAP Li-
Until now, liquidity planning has been conducted by the
quidity Planner in the following ways:
global treasury department. The policy unit receives

Direct determination of cash flows
spreadsheets from the individual subsidiaries and inte-

Quality of actual data by integrating SAP R/3 Ac-
grates them into a central liquidity planning document.
counting
This planning process proves to be too complicated,

Extraction from the SAP R/3 systems into SAP BW
time-consuming, and rigid.

Flexible planning functionalities to map different

Successful implementation of an efficient corporate-
A cash accounting based on value-date dependent
documents from SAP FI is not carried out because Cash
planning scenarios in SAP BW/SEM
Accounting in SAP Liquidity Planner is currently not be-
wide planning process due to the use of SAP BW/
ing used.2 The corporate accounting department merely
SEM as a central planning platform (this is particularly
performs an indirect analysis of actual data (indirect cash
flow statement).
The company management wants to use a tool that
efficient for decentrally organized companies)

Central reporting tool for all parts of the company

Use of SAP BW/SEM for the planning aspects of SAP
can measure (actual data) and plan (planned data) the in-
Liquidity Planner; this enables you to establish a rela-
dividual cash flows. Based on the new strategy, corporate
tionship with other plannings (for example, sales and
management realizes that a powerful tool is required for
distribution plans, investment plans) and an integra-
cash accounting and liquidity planning, but also for con-
tion with liquidity planning.
trolling the corporation in general. In addition, the decentralized planning process will become more efficient
In various implementation projects, we’ve seen many
and less time-consuming. Furthermore, it must be possi-
companies struggling to survive with ever-changing mar-
ble to easily and quickly map the various planning sce-
ket environments, similar to the initial situation described
above. The companies need reliable and up-to-date in-
2 As already described in Chapter 1, you cannot use the SAP Accounting
module to directly determine your cash flow situation.
14
© Galileo Press 2006. All rights reserved.
formation, as well as the ability to run through various
2.1 Conclusion
planning scenarios. Often, the focus was on improving

Use the general ledger account, “100000 cash” as an

You should use the information and assignments pro-
the planning process.
additional cash account.
Our experience has shown that these or similar situations, carrying out cash accounting and liquidity planning
vided in the following table (see Table 2.1).
with SAP Liquidity Planner can be very useful. In the remainder of the book, we’ll describe the functionality of
SAP Liquidity Planner and how you can implement it.
2.1
Conclusion
In the next two chapters, we’ll only marginally refer to
SAP Liquidity Planner is the ideal tool for analyzing
the above example and provide a detailed description of
and planning cash flows. By using this tool, you can
the technology and functionalities of SAP Liquidity Plan-
identify imminent bankruptcies due to insolvency and
ner.
counteract them with the appropriate measures.
When working in Chapters 3 and 4, you should use
the IDES system provided by SAP with the following
data:

Company code 1000 for IDES AG, company code
2200 for IDES France, and company code 2600 for
IDES Italia.

Use the international chart of accounts, INT.
Liquidity item (LI)
Account number
Summarization item
100000
Cash flow from operating activities
------------
LI
110000
Revenues from product sales
800002
LI
120000
Revenues from services sales
800001
LI
130000
Raw materials
170000
Summarization item
140000
Personnel
------------
LI
141000
Payments of wages and salaries
449000 and 430000
LI
142000
Payments of social insurance contributions
440000
LI
150000
Payments for rents
471000
LI
160000
Payments for materials
476100; 476000
LI
170000
Payments for raw materials
300000
Summarization item
200000
Cash flow from investing activities
------------
LI
210000
Expenditures for financial assets
133000
LI
220000
Expenditures for tangible assets
11000
LI
230000
Revenues from enterprise transfers
11000
LI
240000
Capital gains
133000
Summarization item
300000
Cash flow from financing activities
------------
LI
310000
Revenues from borrowing
62110
LI
320000
Expenditures for loan amortization
62110
LI
330000
Revenues from interest
273100
LI
340000
Expenditures for interest payments
220000
Table 2.1 Case Scenario: Liquidity Item and Account Numbers
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15
Index
A
Cash account 15
Document update 75
ABAP editor 19
Cash accounting 3, 5, 6, 8, 10, 14, 19,
Drilldown report 78
ABAP report 28
Account-based integration 8
22, 28, 75, 79
Cash Budget Management 5, 71, 72, 75,
Accounting 8, 11
Accounts receivable and accounts
payable accounting 26
77
E
Cash inflow 8, 13
Electronic bank statement 21
Cash Management 5, 9, 10
Element definition 73
Account assignment type 9
Cash outflow 8, 13, 14
External capital 6
Accrual accounting 5
Characteristic 49, 50, 52, 53, 54, 56, 73
Extraction 64, 66
Actual account 22, 23
value 73
Actual Calculation 14, 17, 19, 21, 27, 35
Chart of accounts 8
Actual data 14, 41, 64, 75, 76
Clearing document 21, 28
Extractor 17
Administrator Workbench 41, 64
Clearing transaction 25
F
Allocating assignments from FI informa-
Commitment item 72, 73, 74, 75, 76
Financial accounting 8, 9, 19, 21, 31
Communications structure 51, 64
Financial accounting-related liquidity 5
tion 22
Analysis report 36
Company code 19, 72
Financial management area 71, 72
Application menu 28
Company structure 71, 76
Financing requirement 7
Application of funds 9
Consistency check 37
Fiscal year variant 72
Assignment 23
Corporate accounting 13
FI Document Chains 37
from FI information 24
Corporate Finance Management 28
Flow-of-funds analysis 5, 6, 7
mechanism 21, 23, 28
Cost accounting 5
Flow-of-funds planning 6
Creditworthiness 8
Flow data 26, 27
B
Crystal Reports 40
FM area 72, 75
Customizing 18, 19, 21, 22, 24, 71
From Bank Statement 23, 30
Bank account 23
From Bank Statement Information 23, 29
Bank statement 23, 30, 31
From FI Information 24, 26, 27, 33, 34,
item 29
Basic InfoCube 44
D
DataSource 40
Buffer item 35
Data flow 45, 51
Business Area 22
Data model 19, 28, 36
35, 37
From Invoices 26, 35
Business Content 40, 41, 42
Data target 40
G
Business transaction code 30
Default item 19, 22
G/L account 26, 32
Business Transaction Events 18
Defining
C
G/L accounts list 37
actual accounts 21
Global treasury 13, 14
query-relevant G/L accounts 22
GR/IR clearing account 25
query sequences 22, 26
Case scenario 13, 15, 18, 19, 20, 21, 23,
26, 31, 34, 36, 45, 52, 54, 55, 56, 59
Cash flow 5, 6, 7, 10
accounting 5
Deletion process 26
Determinability 20
H
Direct determination 9
Having an effect on liquidity 9
Document chain 21, 24, 31
Having no effect on liquidity 9
statement 5, 7, 81
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85
Index
Hierarchy 52
N
House bank 22, 30
N:M Treatment 24
Rebuild 27
Net cash flow 13
Recipients 20
I
IAS 5
New Formula 68
Release status 17
Number range 19, 36
Reporting 14, 40, 43, 71, 77
object 20
IDES 13
IDES system 15
R
platform 14
Report Painter 73
Retrograde determination 21
Implementing SAP Liquidity Planner 13
O
Indirect cash flow statement 14
ODS object 43
InfoCube 43, 44, 48, 52, 66
Online update 27, 28, 32
S
InfoObject 40, 43
Overall process 21
SAP Actual Calculation see
InfoProvider 43
Information System 28, 36, 71
Actual Calculation
InfoSource 40, 64, 65
P
Insolvency 81
Partial reassignment 24
risk 6
Plan/actual
SAP Business Content see
Business Content
SAP BW 14, 17, 39
SAP BW-BPS 54
Installing assignment mechanisms 22
analysis 14, 20
SAP Liquidity Planner 6, 17, 39
Internal financing potential 6, 7
comparison 17, 71, 72
SAP R/3 3, 14, 17, 65
deviation 69
K
Key figure 57
SAP R/3 Enterprise 71
Planability 20
SAP SEM 3, 14, 17, 39
Planned data 14
SAP SEM-BPS 48, 53, 54
Planning 76, 79
area 54, 55, 56, 61, 74
Scheduler 66
Solvency 6, 7
L
data 41, 44, 60
Source of funds 9
depth 20
Source symbol 36
Layout Builder 54
function 54, 55, 61, 76
Storing global data 21, 22
Lead column 73
functionality 17
Strategic liquidity 7
interval 53
System integration 17
Line item 28
layout 48, 53, 54, 59, 60, 73, 74
System table 19
Line items table 27, 29, 36
level 55, 56, 57
Liquidity
package 55, 58, 61
structure 74
T
analysis 25
process 14, 15, 79
forecast 10
profile 74
Test run 28
item 15, 19, 20, 25, 30, 31, 32, 35
screen 61
Tools 26
planning 3, 5, 6, 14, 39, 63, 71, 77
unit 53
Totals list 37
relationship 7
value 74
Totals table 27, 31, 36, 71
workbench 55
Total cash flow 7
M
Plan version 74, 75
Transactional InfoCube 44
Plug-in 17, 81
Transaction Events 18
Manual transfer posting 19
Posting data 25
Transfer posting 36
Master data 19, 45, 46, 47, 49, 75
Posting transaction 31
Transfer rule 65
Modeling 40
Profit 6
Transfer structure 51, 65
Multi-planning area 54
MultiCube 41, 45
Treasury 71, 72, 73, 74, 76, 77
MultiProviders 43
Q
mySAP ERP 71
Query 32, 40, 67, 68, 69
sequence 23, 30, 37
86
© Galileo Press 2006. All rights reserved.
U
Update rule 50
Index
V
Variable 40
Version concept 17
W
Web Template 40
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87